20 years old with 430k windfall (need strategy)
long story short I got an inheritance from an extended family member to the tune of 430k after tax. Before this life-changing money was dumped into my lap, I was certain that I would be around 115k in student debt. Now I will not only be debt-free out of a great business university but also have 310k to invest. I have around 5 years of investing/trading experience (mostly messing about with derivatives which I stay away from now obviously) so while I'm not new to investing I am very new to the amount of capital I'm working with. I do not favor DCA'ing it into an ETF because lump sum tends to outperform. I guess I'm just kind of in shock and need some help. My foremost priority is to MAINTAIN the amount of money I have and my 2nd priority is growth. I've seen too many 20-somethings that are wet behind the ears, get too excited, and make terrible decisions. I just want a ETF portfolio plan and general suggestions for how much I should allocate. just want to hear a wide variety of opinions.
TLDR: I got 430K will graduate with no debt and be able to utilize around 310K for investing into ETFs. Any suggestions on which ones I should look into?
Honestly man that’s some great starting capital. I’d go ahead and max out your Roth (make one if you haven’t yet). And then dump the rest into an aggressive robo from Vanguard or Schwab. They will do everything for you including tax loss harvesting. Unless you already have a job and are looking to stay put then that’s quite the down payment for a house, but otherwise I’d just do the above and never look at it.
Yeah, I plan on probably allocating 210-250k to a split between SPY, VOO, and VTI or maybe a mix of other ETFS, If I contribute a healthy amount per month I will be a millionaire by 30 (I can't even believe I'm saying that). This is assuming I can generate 9-10% a year and that there are no perfect storms (while rare they absolutely happen). The other amount which will be around 90-100K I don't know what I'll do. Maybe 401k or maybe a riskier investment portfolio like tech ETFS.
thoughts?
congrats on the money or whatever but damn i fk with your profile picture hard
i fucking love these little guys
A conservative approach is to pay off your student loans, invest the rest conservatively and pencil in a 6-7% growth rate to be conservative on growth, and save up to buy a house with little to no debt once you hit your mid-late 20s.
This will essentially buy you a ton of freedom while you figure out what you want and where you want to be. I think I’ve read that guys are still maturing until ~25 so would hesitate to spend any significant chunk until you are around then or later haha. Don’t use this money as an excuse to live beyond your means too! Those habits will be very hard to break!
I don't have any loans at the moment (LFG!) I was about to get them for the fall semester and got the news!
if i only get 6-7% a year I will be underperforming the market. My goal is not to beat the market but rather to glide upon its wings
Right I bet you’ll get more too but if you goal is preservation of the wealth, it’s a good idea to just project a little less to be conservative. You don’t wanna go in on assuming that you’ll make more early on to be safe. This will make sure you plan properly for your future and don’t try to push the risk and lose more money.
It's not life changing money so honestly the best answer is the most boring -- dollar cost avg into VOO over the next 12-18 months and keep living just as you were. Only reason I say DCA into it is because of where valuations are right now. Check back in 20 years (running math at ~6% annual post tax return). Might be +/- $1mm when you're ~40. +/- $3mm when you're ~60. Over $5mm when you're 70. A nice head start.
Edit -- there is obviously a complete opposite strategy, that is taking the "I'm young and can take risk, can lose money, can recover, no one depending on me" route which would be things like actively trading your PA, buying real estate with decent amount of leverage, etc.
yeah, it is easy to get ahead of yourself and start daydreaming with returns and monthly contributions. my most likely plan is to lump sum of 220,000 into SPY, VOO, VTI etc, and if America keeps on being America I will be set. Are perfect storms rare? Yes! Do they happen? also Yes!
I try to follow Bogle's investing strategy of "staying the course no matter what" which is hard for most people because they get froggy when the market has a bad year and they sell or restructure their portfolio.
it's all about being stoic and that is what I plan on doing (ie live below my means, not give in to lifestyle creep, stay the course)
ill probably have around 5 million in my 40's if I play my card right (this is really not assuming any crazy investments). I really plan on maximising my monthly contributions to this account which will be a taxable account.
You seem to have the right idea, but I want to hammer it home for you: For someone going into finance (even lower paying roles like CF or B4), $430k is not life-changing money. You can't retire, can't buy a 4-5k sqft home (even in a low COL area these days). Nice vacations would be a meaningful % of that nest-egg. I think if most of us on this site were given that money today, we might celebrate with a nice dinner and treat ourselves to something nice, but after that would keep our same jobs and wouldn't change our lifestyles at all.
BUT, that money can be life-changing. If you invest it and don't touch it for the next 45 years, at a 7% growth rate you're looking at ~$10m. That's life-changing.
So, I encourage you to stay disciplined and keep your wits about you. When you get a FT job and are looking to buy a house, get the size of home you would have gotten if you didn't have this money. Live how you would have lived without it.
An exception is that maybe you can spend more of your salary since you already have a nice nest egg growing for you in the background. But generally, you've been gifted a comfortable retirement. You don't have to stress about retirement as long as you spend less than what you make. That's an incredible gift- don't jeopardize that.
Congrats.
I cant stress this enough, this money while technically mine, will not be treated as such. This is money that will be used to create a nest egg that I will not even think about touching, at least for the next 20 years. 430K, in itself, is semi-life-changing because it makes me debt-free out of college (I was going to be 115k in debt not including interest after college). I get what you mean, in no way could I consider retiring, this money actually makes me want to work harder because I plan on maximizing my monthly contributions.
I don't deserve this money and I'm treating it like its not mine (aka not being stupid with this gift)
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